‘Solar module shortlist key for local industry to take off; prices will change over time’: Waaree Energies CEO Amit Paithankar

Edited excerpts:

One of the concerns raised is the higher cost of domestic modules compared to imported modules. According to data from CRISIL, domestic module prices in June were almost double of imported modules before the application of duties. What is behind this disparity in prices?

The most important fact we need to remember is that you get to a good cost position when you scale and do this for a certain number of years. At this point in time, module manufacturing is getting bigger scale-wise. We have over 50 GW right now. From the perspective of cells, we might be sub-10 GW right now but India will reach beyond 20 GW in the next 5-6 months. It’s just a matter of time. Rome was not built in a day. You will see that prices over time will change. There has to be first investment and the ecosystem that needs to come in together.

There needs to be local R&D to ensure that we understand what are the cost dynamics, how can we reduce that, and so on and so forth. It’s important that we invest for a better, secure future and constantly endeavour to have lower and lower costs as we move forward.

You said cell manufacturing capacity will go to around 20 GW in a few months. As of now, we are importing cells from China and essentially just assembling them in India. In terms of the timing of the ALMM order, should we have waited till we have robust domestic cell manufacturing before restricting imported modules?

It’s a chicken and egg story. The best way to answer that is — what comes first? At the end of the day, investment comes first and if you have to attract the investment, the policy framework has to come first. I would say the government has done the absolute right thing. It is because of this chain of events that this extremely capital-intensive industry can see the day where we are actually going to produce 20 GW of cells.

A recent Indian Express report revealed that former New and Renewable Energy Minister RK Singh was of the view that domestic module manufacturers have been engaging in “excessive profiteering”. What is your take on that?

I would love to tell you the exact numbers, but unfortunately, at this point in time, we are in the process of an IPO (initial public offering). Of course, after the IPO, the quarterly results will be out and we’ll speak on how much is the profiteering that we are talking about. But for now, I’m restricted from talking about this in detail.
The former minister also alleged that the market is concentrated with very few players. In fact, almost 50 per cent of the capacity is held by five manufacturers. Do you think that the market is concentrated and does that have an impact on downstream users?

At this point in time, you have four or five manufacturers, which make up 50 per cent. The rest of the 50 per cent is (held by) a lot of small manufacturers. It’s not a small number of players in the marketplace. As you start backward integration, your question becomes more valid because then it becomes more intensive in terms of capital and technology.

Then you will, of course, see that there will be a lesser and lesser number of people as it comes in. But from a module level, it’s definitely not going to be an oligopoly. It’s going to be a market with many players.

On the policy front, we have the residential rooftop solar scheme, there’s the green hydrogen push which will require lots of modules too, and several other schemes that MNRE implements. On top of that, we also have the PLI scheme for module manufacturing and a basic customs duty (BCD) on the import of both modules and cells. Indian module exporters also have good demand coming in from the United States. Given this context, what is the rationale behind restricting the use of imported modules altogether?

Again, we fully endorse that view (of implementing ALMM).

The reason why we endorse that view at this point in time is, if you have to have local industry take off, you will need to create a favourable environment. How do you ensure that you have a local industry? If you answer that question, all of those things that you talked about become almost important for any country to go ahead and do. Let’s say five years from now, what kind of a future do we like? Do we like a future where we are one of the most advanced countries which comes up with energy solutions that are cutting edge? Or would we like us to be at a point where we take everything from one given country? I’m sure you will select the first one and that’s the reason why we should be doing what we’re doing.

Another concern raised is the adverse impact of higher module prices on tariffs. Do you think electricity tariffs will rise?

Actually, no. I don’t want to speak for an IPP (independent power producer) but you can go into the maths to see at what price points power purchase agreements were signed. It’s all public domain information. You will find that the argument that prices because of (ALMM) are hurt is completely misplaced.

On top of it, you look at all the other benefits that we’re going to have with the involvement of top tier education and R&D institutions in the whole process and with Make in India. Then, all the multiplier effects that we are talking about and the understanding of the semiconductor ecosystem that we get out of all of this. It’s a no-brainer in the market.